Display advertising/display marketing vs. real-time advertising (RTA)
Internet advertising is slowly changing. But these changes aren’t coming from the form and content of individual advertising mediums; they’re coming from applied marketing activities and strategies as a whole. Traditional display advertising, sometimes referred to as display marketing, has been an effective and promising tool for advertisers online for a long time, but there’s a new form of display advertising that has changed advertisers’ approaches to online marketing of late: real-time advertising. Real-time advertising, or RTA for short, has attracted a lot of attention thanks to its innovative techniques. We’ll compare and contrast this new marketing instrument in relation to more conventional online marketing measures, to help you decide if RTA suits your needs.
The differences between display advertising and RTA
Both display advertising and real-time advertising are marketing strategies that allow graphical internet advertising to take place. RTA is a modern extension of traditional display marketing. So what exactly separates the two formats?
Display advertising (display marketing)
The terms display advertising and display marketing are usually used interchangeably and refer to the general field of graphic-based online advertising. The marketing materials designed here are displayed online in a graphic format (this differs from search engine marketing, which is based solely on text displays). Banner ads are the best known form of display advertising – they are considered the online equivalent of printed ads. This term covers banners of course, but also conventional advertising media like pop-ups, layer ads, and content ads. These forms of banner ad often contain animation as well as images and text. The other main type of advertising covered within the field of display marketing is video advertising, which resembles traditional commercials on television or at the movie theater. The measures mentioned above are designed to turn website visitors into conversions – which means convincing potential customers who have already shown a basic interest in the product or brand to commit to a purchase after viewing a banner ad or video. There’s two more parties involved in display advertising: the advertiser and the publisher. The advertiser creates a display ad to arouse interest and attract users to an offer. This material is then sent to the publisher, who displays it on one or even several websites for visitors to see. In recent years, there’s been a big rise in the inclusion of a third party operating between the advertiser and the publisher, known as an ad network. These ad networks mediate between a number of advertisers and providers of advertising space. An advertiser uploads the marketing material (banner, video, etc.) onto the server of the ad network and enters a maximum price before the start of a campaign. This price is usually calculated as cost-per-click (CPC) pricing, though there are other methods available. Then the ad network makes the ad available to suitable publishers who are well matched – for example ad space (also known as an inventory) on a travel blog for an online travel agent. The basic principle here is to ensure that the ads are screened on other, content-relevant sites. For more background information and strategies, please refer to our in-depth article on display marketing.
Real-time advertising (RTA)
Real-time advertising is a special form of display advertising that requires a slightly different procedure. The biggest difference is that RTA works with real-time bidding (RTB). RTB is a method that enables advertising space on websites to be auctioned in milliseconds. The process works as follows:
- As an advertiser, you upload your banner ads and videos onto a DSP (demand-side platform) and enter your maximum bid for an ad impression. You can then also enter the different requirements for the target audience of your campaign. This could be related to the demographics and geographical location of website visitors, but can also include more specific preferences and purchase intensions that your audience may have.
- The DSP is connected to the ad exchange platform that operates your marketing campaign. When a visitor heads to a publisher website that is connected to your ad exchange platform, the following happens: first, a software checks whether the website visitor fits to your target audience. This is mostly done through the user’s browsing history, which can be used to check whether the visitor has been subject to any retargeting strategies, like the use of cookies. Evaluating user profiles can give online shops insights about a customer, though the data collected has to be kept anonymous or carried out under a pseudonym for legal reasons.
- If the visitor matches the corresponding target audience description, then your ad will enter an automatic bidding war for the ad impression. If your maximum bid is higher than that of the competition’s, then your banner ad or video will be displayed. If one of your competitors has placed a higher maximum bid, then your ad won’t be displayed and you won’t be charged.
- Different ad exchanges use different pricing models when it comes to charging for a winning bid. A common pricing structure is that the winning bidder pays the sum of the second-highest bid plus another penny – just like on many online auction sites, including eBay.
The entire process described above takes less than 100 milliseconds on average and happens without the user noticing. Further details about RTA and RTB can be found in this article on real-time advertising, which contains an in-depth analysis of the key players in RTA as well as a case study for the complete RTB process.
When should you use real-time advertising?
RTA is undoubtedly an exciting and promising method for marketers looking to advertise online. But even so, automated display advertising campaigns with real-time bidding certainly aren’t suitable for every online marketing department. And despite the positive and negative unique selling points involved in RTA, many of its other attributes also apply to classic display marketing, too. The following overview offers the advantages and disadvantages of both these forms of online advertising.
Shared strengths and weaknesses of RTA and display advertising
Strengths
- Environment-specific ad impressions: websites and platforms that are able to promise a higher potential of visitors from the target group can be systematically found and targeted.
- Greater reach: advertisers can run campaigns to be viewed on many different publisher websites.
- Monitoring: both RTA and classic display marketing offer lots of statistics that can be used to measure campaigns.
Weaknesses
- Users can ignore banner ads: the increased number of online ads means that many visitors no longer pay any attention to the ad impressions.
- Ad blockers prevent ad impressions: if the user has an ad blocker, this will block the embedded ads.
- User experience can be restricted: some ad displays restrict webpage use, which can frustrate users and lead to negative impressions of the offer advertised.
Advantages and disadvantages of RTA vs. classic display advertising
Advantages
- User-specific ad impressions: advertisers only pay for the ad impressions that are shown to users from their defined target market.
- Efficient advertising: the user-specific ad impressions mean a higher ROI (return on investment) and less wasted ads.
- Control over costs: advertisers can set the maximum bid and maximum total budget for campaigns, meaning that small budgets can also be used effectively.
- Less time-consuming: creating and starting an RTA campaign requires a lot less time than traditional display marketing efforts thanks to the automated processes at hand.
Disadvantages
- Higher cost per individual ad impression: the technical overheads involved in RTB make ad exchange platforms more expensive. And since they have to receive a cut too, the cost of an individual ad impression tends to be higher for marketers than in classic display advertising.
- Occasionally incomplete information on the inventory: some ad exchange platforms don’t offer enough information about all the publisher websites that can be used for ad displays. This can make it harder to predict whether the ad actually fits the content of the website in question.
- Sometimes little transparency regarding data quality: the target group that a particular visitor belongs to is decided by data. As an advertiser, you may not always be granted access to these data records. This primarily concerns third party information, which is usually purchased from ad exchange platforms. In some cases, it can be difficult to test the reliability of this user data and how it was collected. There’s a danger that the site visitor data could have been miscalculated, or worse yet, that it was collected through illegal means.
RTA: a modern method on the cusp of a breakthrough
In summary, it’s clear that both display advertising and real-time advertising form key components of a comprehensive online marketing strategy. How and to what extent you use these two measures will depend on the content and aim of your ad campaign. RTA and RTB have been established as an efficient form of online marketing that has real potential to grow in future, while the aforementioned control over costs has made real-time bidding an affordable marketing instrument for small to medium-sized enterprises too. But at present, real-time advertising is still slightly restricted by strict data protection laws in some countries and industries. The future of RTA and RTB will be largely dependent on the way that legal jurisdiction on handling user data changes in the coming years. This means that topics like Big Data and cookie usage laws are set to become even more important for online marketers.